Construction Job Costing Accounting Software
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The job cost module is the core component of construction software solutions and has overall responsibility for tracking expenses vs. revenue as they pertain to a job’s budget and its profitability. The Job cost ledger is fed by sub ledgers such as accounts payable, payroll, inventory, and equipment which send it data for all financial information related to a project including labor, materials and overhead costs.

Job cost should offer a variety of reports and inquiries that provide overview information including initial and revised budgets by phase, actual costs to date, committed costs, expected costs to complete the project, billings to date, and cash collected to date, etc. In construction time is money. The sooner you know about problems, the sooner you can deal with them so most contractors are looking for “realtime costs” postings from sub ledgers.

Read on for more insight into what to look for in a good job cost program.

Watch those margins!
You will have a very hard time running a successful Contracting business without a robust, realtime job cost capability. Without detailed, timely Job Cost data you will have difficulty time keeping score on job progress.

There are various ways jobs are priced including: fixed price, time and materials, change orders and the like. How you track those costs to insure you reach your estimated profit margin is what contractor management is all about. Each phase of the job, along with scheduling milestones, should be tracked continuously.

In order to capture the necessary details it is important for the office and field to be synchronized for capturing labor, material and supply costs along with any anticipated scope changes to the job. Modern management understands that there must be an efficient way of collecting and transmitting job data from the field offices to the home office at the right level of detail and at the right time. For example, it is no longer acceptable to wait for payroll to be run before knowing work in progress labor costs on the job. This is necessary for purposes of progress billing as well as simply tracking current labor costs to see if the job is on plan.

Thoroughly detailed job cost data is also important for estimating or bidding future jobs including both direct costs and appropriate overheads.

• Coordinating the “flow of information” between the job site and home office.
• Using the Job Cost information proactively while the Job is in Progress.
• Determining what the profit margins and overhead should be for the different types of jobs you do.

Contract/Not to Exceed Jobs
A key component in modern day construction is timely, accurate communication with the customer. This can involve any or all of the following: budgets, phases, work-in-progress reporting, progress billings, change orders, tool/equipment tracking, vendor billings, material deliveries and other job criteria.

We all understand that what managers and customers hate the most is surprises for costs or schedule slippages. Any Contractor who lacks work-in-progress information is at risk to run into any number of problems. Cost overruns can occur at anytime and will wind up costing the contractor, and not the customer, most of the time. Here are a few examples:

• Actual Labor hours exceeds the estimate.
• Materials delivery at the job site has been delayed.
• Materials are missing, lost or stolen at the job site.
• Unapproved Change Orders slip through the cracks
• Material Prices are billed higher than the original quote.
• Tools are missing or lost at the job site.
• And that’s just a small sampling of what can happen while the Job is in Progress. Once the Contract Job is completed, the Contractor needs to take an honest look at the final numbers to see how well, or poorly he did.

The price of information “silos”
More often than not when we speak to contractors looking for a new software solution, spreadsheets, many of them, are mentioned in the conversation. This is because the company started out using an inexpensive small business accounting (usually QuickBooks) and circumvented its limitations by building special purpose spreadsheets for tracking job costs, changes, inventories and more. This, of course, leads to duplicate entry of information, ad hoc, often inaccurate and late information gathering and disconnected information throughout the organization.

The most common catch phrase used by prospective software buyers make is need for an integrated solution.

Integrated Design Saves Time
A single entry, integrated program gives the Contractor a leg up over his competitors. As employees enter in their information, the data flows naturally throughout the program, hitting all the required destination points. With an integrated program, the Job Cost information is more timely and accurate.

Dashboards
Another feature we find contractors asking about more and more is Executive Dashboards. These are those fun onscreen reports which hit the highlights of KPIs (key performance indicators) and show management key data in such critical areas as: cash over and under billed for jobs, outstanding change order submittals, scheduling delays, cost to complete vs. remaining budget, scheduled actual vs. estimates for labor and materials, and the like.

Field data collection recording labor and Material items at the job site
Accurately and timely recording of labor and or materials at the job site is an age old problem. Worker’s are good at doing construction, but not necessarily good at paperwork. With today’s technology you can capture time in the field with a PC, tablet or handheld by person and job.

You can also conveniently capture materials used for a job. The data can either be printed or transmitted to the central office for batch processing later in the day.

Costing and Pricing the T&M Job
Office people also like working with Field Sheets because they can cost and price each material item faster. Field Sheets eliminate the age old problem of having to read a workers handwriting - or trying to interpret the different descriptions workers use for the same item. The costs and prices must be accurate and up to date for this step to be successful.

Reviewing your Profit
Prior to billing, you can review all costs, charges and profits for the job. This alerts you to inaccuracies such as a wrong quantity that was entered on a labor, material or direct item. You can then use it to make adjustments to your job margins. You’ll know how much money you’re making before the T&M bill is printed.

For comparisons of different accounting software products, download the free Construction Software Selection Kit.

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